Income ideas for a low-rate world

The past decade of record-low interest rates has had a huge effect on anybody wanting to earn a decent income from their capital. But it can still be done, if you're willing to accept some risk.

The past decade of record-low interest rates has had a huge effect on anybody who needs to earn a robust income from their capital. In essence, they have been forced to change from savers (who earn income from bank deposits, protected by government guarantees) to investors (who don't enjoy that safety net and need to think more about the risks they take).

This is unlikely to change. Optimists point to rising interest rates in the US and suggest that this world of low rates is almost at an end which would help savers. Yet the Federal Reserve will be lucky to get away with another 1% to 1.5% of interest-rate increases before it runs into the next recession, topping out at interest rates of 2.5%. And the Bank of England is starting from an even lower level, making a rapid rise even harder. So while slightly higher rates might be in the offing, we can't expect a return to the long-term normal of around 5%.

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David C. Stevenson
Contributor

David Stevenson has been writing the Financial Times Adventurous Investor column for nearly 15 years and is also a regular columnist for Citywire. He writes his own widely read Adventurous Investor SubStack newsletter at davidstevenson.substack.com

David has also had a successful career as a media entrepreneur setting up the big European fintech news and event outfit www.altfi.com as well as www.etfstream.com in the asset management space. 

Before that, he was a founding partner in the Rocket Science Group, a successful corporate comms business. 

David has also written a number of books on investing, funds, ETFs, and stock picking and is currently a non-executive director on a number of stockmarket-listed funds including Gresham House Energy Storage and the Aurora Investment Trust. 

In what remains of his spare time he is a presiding justice on the Southampton magistrates bench.